Why Is OGE Energy (OGE) Down 22.5% Since Last Earnings Report?

A month has gone by since the last earnings report for OGE Energy (OGE). Shares have lost about 22.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is OGE Energy due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

OGE Energy Q4 Earnings Miss Estimates, Revenues Down Y/Y

OGE Energy's fourth-quarter 2019 earnings of 18 cents per share missed the Zacks Consensus Estimate of 29 cents by 38%. Moreover, the reported figure plunged 33.3% from 27 cents registered in the year-ago quarter. The downturn can be attributed to the asset impairment at Enable Midstream.

For 2019, the company reported earnings of $2.16 per share, which improved 1.9% from $2.12 registered in the prior year.

Revenues

OGE Energy’s operating revenues of $472.5 million dropped 7.7% from the prior-year quarter’s $511.8 million. The dip in revenues was primarily a result of lower revenues from contracts.

For 2019, the company generated operating revenues of $2,231.6 million, which also declined up 1.7% from the prior-year figure of $2,270.3 million.

Operational Highlights

Total sales in the reported quarter amounted to 6.7 million megawatt-hours (MWh), compared to 6.8 million MWh in the prior-year quarter. Meanwhile, the company’s customer count inched up approximately 1% to 857,754.

Cost of sales summed $161.6 million during the fourth quarter compared with $228.9 million in the prior-year quarter.

Total operating expenses rose 7% year over year to $240.6 million on account of higher operation and maintenance expenses, depreciation and amortization expenses as well as higher taxes (other than income).

The company’s operating income surged 21.2% in the fourth quarter to $70.3 million from the year-ago quarter’s $58 million.

Interest expenses totaled $37.8 million in the fourth quarter, in line with the year ago quarter’s figure.

Other Highlights of the Release

OGE Energy reported net income of $433.6 million in 2019, down from the prior-year figure of $425.5 million.

OG&E: The segment’s net income rose 6.7% to $350 million in 2019, from $328 million in 2018.

Natural Gas Midstream Operations: The segment posted net income of $81 million in 2019, compared with $109 million in the prior year.

2020 Guidance

OGE Energy expects its earnings for 2020 to lie in the range of $2.19-$2.31 per share. The Zacks Consensus Estimate for 2020 earnings is pegged at $2.28, near the high end of the company’s guided range.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.